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Mallinckrodt Shares Fall on Guidance - Analyst Blog

The share price of
Mallinckrodt
(
MNK
) continued to fall after it issued its guidance for fiscal 2014
(ending Sep 26, 2014). We note that fiscal 2014 will be the first
full year of this specialty pharmaceuticals business company
after it was spun off from
Covidien
(
COV
) earlier this year.

In fiscal 2014, the company expects earnings in the range of
$2.45 to $2.65 per share. The Zacks Consensus Estimate for fiscal
2014 currently stands at $2.51 per share, which is within the
guidance range.

The company expects capital expenditures to be between $140
million and $160 million. While research and development expenses
in fiscal 2014 are expected to be 6% to 8% of net sales, selling,
general, and administrative (SG&A) expenses will be higher in
fiscal 2014. SG&A expenses are expected to be higher due to
rising commercialization expenses related to its pipeline
candidates MNK-795 and MNK-395. Mallinckrodt is focusing on
restructuring in order to control cost.

Pipeline

Mallinckrodt has several late-stage candidates in its pipeline
including MNK-795 and MNK-395, which are currently under
regulatory review. In Jul 2013, the U.S. Food and Drug
Administration (FDA) accepted the marketing application for
MNK-795 for treating moderate-to-severe acute pain. The
regulatory body is reviewing the marketing application on a
priority review. The marketing application for MNK-395 in pain
associated with osteoarthritis of the knee was submitted in Aug
2013.

Another pain candidate, MNK-155, is currently being evaluated in
phase III trials with regulatory submission expected by the end
of fiscal 2014. The company is also looking to boost its pipeline
through acquisitions.

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